The EastAfrican BUSINESS JUNE 20-26,2015 MANAG E R Py≥amiding: How to find the ≥ight expe≥t f≥om the field fo≥ any p≥oblem expertise of people in distant, analogous fields can yield highly novel solutions to innovation problems. T But finding these experts pos- es a significant challenge of its own. Who and where might they be? The prospect of searching for them can seem overwhelming. Let us say, for example, you are a manager of a company that makes truck-mounted forklifts, and, despite your best efforts, you cannot figure out how to make the mounting and unmounting of the forklifts safer, more efficient and more userfriendly. You have a sense that radical solutions may be floating around in other industries, but where would you even begin to look for fields that are analogous to yours? It turns out there is an effec- tive way to answer: A method called pyramid search, with the word “pyramid” meaning, essentially, a subject area. Although it is a significantly creative endeavour on its own, the steps involved are quite straightforward. We have also discovered that it has widespread implications — we often find ourselves using pyramid searches in other contexts. Pyramid search was pio- neered and studied by Eric von Hippel of the Massachusetts Institute of Technology and others. It is not the only way to look for analogous-field solutions to innovation problems — another well-known method is broadcast search, studied by Karim Lakhani of Harvard Business School and others. But pyramid searches can be remarkably effective in finding that needle in a distant haystack: Identifying rare knowledge within large and poorly mapped search areas. Unlike broadcast searches, pyramid searches are uncon- here is a growing awareness among research and development managers that tapping the interviewees provided one to seven boundary-crossing referrals, representing a large potential trove of analogous knowledge sources. Moreover, we found clear con- firmation that top-level experts were significantly more likely to provide referrals into analogous domains, and 40.2 per cent of interviewees who provided domain-crossing referrals did so into distant, rather than nearby, fields. That is a plus: More-distant fields are more likely to contribute radical new ideas. Our involvement in the fork- COMMENTARY MARION POETZ AND REINHARD PRÜGL “Identify people who have some knowledge in a given area and ask who else knows more than they do.” strained by the make-up of the “crowd” of crowdsourced solvers. Moreover, pyramid searches allow for learning on the fly: Solution seekers can adapt, refine and even replace the original question as they go. The basic idea is that you iden- tify people who may have some knowledge of or interest in a given topic area, and you ask them who else knows even more than they do — or who else knows of others with greater knowledge. Then you contact those people and repeat the process until you get to the top of that particular topic area, or pyramid, and find individuals with the highest levels of expertise and passion. disOnce you are at a peak of a pyramid, you are more likely to get a referral to someone in a tant but analogous topic area (when we say “distant,” we are not referring to geography but to contextual differences between subjects). That is because the highly curious, knowledgeable, well-connected people at the top of pyramids tend to reach out to people outside their domains. Our research has shown that you have to be careful and systematic when conducting pyramid searches. First, brainstorm starting points in numerous potentially analogous fields. For this stage, do not just stick to your target area — interviewees outside your immediate domain are more likely to provide referrals into analogous domains. Make sure your team is made up of experienced interviewers who understand the principles of successful pyramid searches. The way they formulate and communicate the initial problem matters a lot: They need to be able to communicate it so that interviewees connect their knowledge to it. With each interview, meas- ure the level of knowledge you have gained. If you are not gaining much, you are on the wrong track. But if you have gained a lot with each successive interview and then suddenly stop getting referrals upward, you have probably reached a peak. Another indication that you are at a peak is that you have heard the same name from several people. In our study, 35.2 per cent of the 600 interviewees who provided a referral at all and 18.4 per cent of our total sample of 1,147 interviewees were able to perform the creative task of referring into at least one analogous domain. Each of those 211 lift case provides an example of the process. We used brainstorming to identify promising starting points, including a logistics firm owner who is a heavy user of truck-mounted forklifts. That led to a maker of machinery-mounting systems for farm tractors and eventually to a person in the entertainment-events industry with tremendous knowledge about safely and quickly mounting and unmounting stage equipment for shows and concerts. The forklift company had found the needle in the haystack: Although the industries are very different, the event-technology solutions were transferable to the forklift problem with only minor modifications. In another case, we worked with an inventory-management company to search for ideas about improving parts tracking. One starting point was a journalist who had written about robot soccer, which led us to a player whose work on self-orienting sensing technologies for robots was easily transferable to inventory management and helped the company improve its tracking systems. The ideas from these analo- gous fields probably would have been out of reach if the companies had used traditional ways of searching for knowledge. Once you have tried pyramid- ing, it becomes a whole new way of thinking about people and knowledge. It has become our go-to method of searching for expertise. Marion Poetz is an associate professor at Copenhagen Business School; Reinhard Prügl is a professor at Zeppelin University in Friedrichshafen, Germany. Companies should not t≥eat going global as a default g≥owth option A JOINT REPORT NYT WE ALL like to learn from the best. So, when it comes to growth it is tempting to take global high performers like General Electric, IBM, Shell or BMW as role models and look for opportunities outside the home markets. The trouble is that these global role models are much easier to admire than to imitate. In an analysis of 20,000 companies in 30 countries, we found that companies selling abroad had an average return on assets of minus 1 per cent as long as five years after their move. It takes 10 years to reach a modest +1 per cent and only 40 per cent of companies turn in more than 3 per cent. A look at Devon, a midsize US oil and gas producer, illustrates why international expansion produces such low numbers for so many companies. In 1999, Devon acquired PenzEnergy and in 2000 Santa Fe Snyder. The two deals gave it access to operations in Azerbaijan, West Africa and Brazil. After making some initial investments in these oil fields Devon eventually realised that it lacked the scale to absorb the risks that came with them. When approvals for environmen- tal permits were delayed in Brazil, the company was forced to incur rental costs on drilling equipment that it could not deploy to alternative fields and took a capital hit that a firm its size could ill afford. In 2009, Devon sold off all of its foreign assets and used the proceeds to invest heavily in booming shale development in the US. Global expansion is also more complicated to manage. In the 1990s, Boise Cascade, a large, ver- tically integrated wood-products manufacturer in the US, decided to expand to Brazil, where it acquired timberlands and built a new mill. Operating in Brazil, however, turned out to be much more difficult than expected because of regulatory, political and cultural differences. Management attention, including frequent trips, took far more time than for similar plants at home. While Boise was able to make the business profitable after a few years, the profits were not high enough to justify the added investment needed and the dispropor- tionate drain on top management time. In 2008 Boise threw in the towel and sold the Brazilian operation to a local paper company for $47 million. The lesson to be drawn from these experiences is that most companies should not treat international expansion as a default growth option. By Christian Stadle, associate professor at Warwick Business School, UK, and Julia Hautz, assistant professor at Innsbruck University School of Management in Austria. 29